Swedish Social Democrat leader Stefan Lofven celebrated a narrow victory in the country’s elections yesterday and said that he was prepared to form a government with other parties of the left.

Voters turfed out the government of conservative Prime Minister Fredrik Reinfeldt after eight years in power.

His government had cut income and corporation taxes, abolished a wealth tax and trimmed welfare benefits. 

It also diluted labour laws and privatised state-owned companies.

Mr Reinfeldt conceded defeat after his bloc only took 142 seats in the 349-seat parliament, while the opposition bloc won 158 seats.

In percentage terms, the Social Democrat-led Red-Green bloc took 43.7 per cent of the votes on Sunday while the governing coalition got 39.3 per cent, according to official preliminary results.

The far-right, anti-immigration Sweden Democrats became the country’s third-largest party with close to 13 per cent of the votes — 49 seats.

That result more than doubled their seats in parliament, leaving Sweden’s anti-racists with much work to do.

Jubilant rightwingers declared that they now held the balance of power.

Party leader Jimmie Akesson insisted that the Social Democrats would be forced to deal with his Sweden Democrats Party.

But Mr Lofven immediately insisted that there was no place for the far right in government.

“I will not work with them,” said the former welder and trade union official.

“We need a strong government. 

“Our party and I will take the responsibility so that Sweden will get a strong government not depending on the Sweden Democrats.”

Mr Lofven said that he would begin by talking to the environmentalist Green Party and was willing “to co-operate with other democratic parties that want to take responsibility for Sweden,” possibly including the former communist Left Party.

But in order to fashion a workable government, Mr Lofven may be faced with the prospect of his working alliance including one or more small right-of-centre parties, which may restrict the government’s policy options.

The election result marks the end of an era of tax cuts and pro-market policies under Mr Reinfeldt, who has resigned as conservative party leader.